Monsters Inc. 2: Lost in Scaradise was a canceled sequel to Monsters Inc. It would have been produced by Circle 7 Animation, a company owned by Disney.
Pixar had a contract with Disney that would let them make 7 films on their own, with Disney only involved for distributing purposes. After this contract ended, rights to all franchises originally produced by Pixar would belong to Disney including rights to making sequels. When the 7th Pixar film, Cars, was finished, Disney formed another animation company known as Circle 7 Animation who began working on drafts for Toy Story, Monsters Inc., and Finding Nemo sequels. All of these planned sequels were cancelled, but most movies that were planned to get sequels via Circle 7 eventually did through Pixar.
In early 2006, it was decided that Disney would be better off owning Pixar altogether rather than just the franchises. As a result, Circle 7 Animation was shut down thus cancelling the drafts of the Toy Story, Monsters Inc, and Finding Nemo sequels, although Toy Story and Finding Nemo eventually got sequels made by Pixar, and Monsters Inc got a prequel.
One year after the events of the first film, on Boo's birthday, Sulley and Mike go to her house to wish her a happy birthday, however, when they get there, they find an old lady asleep in her bed. This leaves Sully and Mike to think that Boo has moved to a new home, so Mike and Sulley set out to find her. The full plot can be viewed here.
Why It Was Cancelled
- In early 2006, it was decided that Disney would be better off owning Pixar altogether rather than just the franchises. As a result, Circle 7 Animation was shut down thus canceling the film and letting Pixar make a prequel (Monsters University).
- The film was canceled, and will likely never be released.
- A comic series known as Monsters Inc. Laugh Factory served as a continuation of the 2001 film.
- A prequel to Monsters Inc. titled Monsters University was released in 2013.
- A world based on Monsters Inc appeared in Kingdom Hearts 3. The story on that world is implied to be after the events of 2001 film, though this could be non-canon.
- A direct mid-quel Disney+ show called Monsters at Work which was planned to be released in 2020 but later delayed and was later released in 2021 instead (20 years after Monsters, Inc.).